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ECB's Lane says can do more QE if needed: report

The European Central bank will "review and possibly reconsider" it monetary policy stance when it next meets in March because of weaker-than-expected inflation dynamics in the eurozone, ECB President Mario Draghi said on Thursday.

[DUBLIN] The European Central Bank has room to do more quantitative easing if economic data over the next few months suggests it's needed, new ECB governing council member Philip Lane was quoted as saying on Friday.

In Lane's first council meeting last month, the ECB extended its asset-purchase programme by six months but the measures fell well short of the aggressive easing many investors had hoped for from ECB chief Mario Draghi, who has over-delivered in the past.

Debt investors on Thursday moved to price in a 50 per cent chance of a further rate cut from the ECB at its March meeting as this week's Chinese market rout and sliding oil prices dimmed the outlook for inflation. "By that point (December) there was plenty of evidence that QE was effective, that it was helping to increase credit growth in Europe, is helping to reduce lending rates in some countries," Mr Lane said in a transcript of an interview with the Irish Times newspaper, published on the central bank's website. "But it's important to say that no door has been closed. If the data flow over the next number of months is that more needs to be done, more can be done," Mr Lane said in his first remarks since becoming Irish Central Bank governor in November.

Mr Lane, who took over from fellow university professor Patrick Honohan, said the European economy is recovering, although low oil prices have been an important source of support amid an"unusually high amount" of uncertainty in the global economy.

Regarding the turbulent start to Chinese markets in 2016, Mr Lane said he believed there was a lot of policy space for the Chinese authorities to intervene in the transition to more of a consumption driven economy and the inevitable slowdown in an economy of its size.

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"Those economies like China which have a long sequence of external surpluses, have a large bank of foreign reserves, they have a lot of policy instruments to deal with any problems that emerge," Mr Lane said. "Whereas those economies such as Brazil which have been running external deficits and which basically do have a heavy reliance on foreign currency debt, are much more vulnerable."


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